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No, the Government Does Not Offer Grants for People With Bad Credit

Anna Davies is a writer and content strategist. She has worked for The New York Post, Refinery29 and Cosmo and written for Student Loan Hero, MagnifyMoney, The Cut, Women's Health, and others. She specializes in writing about...

When you’re struggling to pay down debt, you’re grateful for any opportunity to straighten out your finances. If you receive an email about a government grant designed specifically for people with bad credit, you might be tempted to click.

But there’s a problem: The government does not offer cash grants to people with bad credit. If you receive an offer for one, it is simply one of the many “money for nothing” scams that prey on people looking to get out of debt. The Federal Trade Commission (FTC) has issued warnings about such scams, but there’s only so much the government can do to protect you. Let’s take a look at some ways you can detect these scams and keep control of your finances.

How to spot a government grant scam

When it comes to defending yourself against financial scams, your first line of defense should be your own skepticism. Always ask yourself: What’s in it for them? Why would the government give free cash to someone with a low credit score? Taking a skeptical view of any financial offers can save you trouble in the long run. Beyond that, there are some specific red flags that could help you spot a government grant scam.

You’re being awarded a grant you’ve never applied for

The government gives grants to individuals, businesses and organizations for a wide variety of reasons. But all government grants have one thing in common: They require applications submitted through a governmental website, like Grants.gov. If you haven’t applied for a grant (and you’d likely remember if you did, as these grant applications tend to be lengthy), then there’s no way you’re eligible for one. End of story. If you’re being told you can apply for the grant over the phone or email, that’s also a sign of a scam.

The grant is being offered by the ‘Federal Bureau of Grant Awards’

Grant programs from the government have a variety of complex names, often in the form of tongue-twisting acronyms. But the Federal Bureau of Grant Awards, for example, does not exist. And just because your caller ID says a call is coming from Washington, D.C., that doesn’t mean it is. Technology today also makes it easy to create official-looking websites and email addresses. Always do research on any offer that comes to you unsolicited, and never trust someone just because they send you to a website that looks or sounds official.

You’ve ‘won’ a grant

Being told you’ve won something can be exciting, but the government doesn’t hold lotteries for grants. Sometimes, the scammer may suggest that you’ve “won” a grant based on good financial behavior, such as paying your taxes on time or purchasing a home in a certain part of the country. While you may feel flattered, remember that the government does not issue grants for good financial behavior.

You’re being told you need to spend money to receive money

One common tactic for scammers is to get you to share your credit card, debit card or bank account information, and one way they do that is by telling you there’s a “processing fee” needed to access your grant. But the government does not charge application fees for grants, and any financial information required by a grant application would have to be submitted through a government portal like Grants.gov, not over the phone or by email.

You’re being told that a cash grant from the government can be spent however you like

Sorry, but the government will not fund your next tropical vacation. Government grants are usually given for very specific uses, none of which are recreational. And even those grants meant for an individual are usually awarded through a local, state or nonprofit program. For example, the federal government provides grants to states so they can administer the TANF (Temporary Assistance for Needy Families) program, which assist families who need help covering expenses for basic needs. Always be suspicious of any grant that supposedly goes directly into your pocket with no strings attached.

How to protect yourself from government grant scams

Scammers don’t discriminate, and no matter how financially savvy you are, you may find yourself briefly tempted by an offer that is not legitimate. Here are some tips to protect your personal information and your money. These tips apply to personal loan scams, too.

Regularly check your credit and consider a credit freeze

Getting solicitation calls can be a good reminder to check your credit and make sure that there are no fraudulent accounts open in your name. You can get a free copy of your credit report once a year from each of the three credit reporting bureaus. For peace of mind, you might also consider freezing your credit. A credit freeze helps prevent scammers and identity thieves from opening a new line of credit in your name.

Don’t share sensitive information online

Never share your bank account number, routing number or Social Security number with anyone you don’t know. Remember, no government grant will require you to submit that information by any means other than a government website. (On that note, if you receive an email with a link to a grant offer, avoiding clicking it. It might lead to a malicious site that infects your computer with a dangerous virus or malware.)

Don’t feel you have to act ASAP

A scammer may make you feel like you’ll lose the opportunity if you don’t provide your information immediately. It’s a classic way to put pressure on you and trick you into making a bad decision. If someone is discouraging you from doing further research into their offer, hang up and walk away.

Tips for getting a loan with bad credit

There’s a reason so many people fall for government grant scams every year: The offers are tempting! When you have bad credit, it may feel impossible to get help. But there are ways to get a legitimate loan even if you have credit problems.

Consider a personal loan

A personal loan can be used to consolidate debt, create a repayment plan and make you feel more in control of your finances. If you shop around, it is possible to find personal loans available to those with bad credit. Be aware, though, of interest rates and repayment terms, and make sure to research reviews of the lender to see if the loan is a good fit for you.

Consider a cosigner

If you have poor credit, you may have better luck getting a loan if you have someone who can agree to serve as a cosigner. What is a cosigner? A cosigner essentially promises to shares the risk of the loan with you. If your cosigner has good credit, that may help you access different loan options. But remember: If you fail to keep up with the payments, the cosigner will be on the hook as well, so make sure you and your cosigner talk through expectations on both ends.

Make a plan to improve your credit

The best path to qualifying for any kind of loan is improving your credit score. It may seem like a daunting journey, but you can easily start by checking your credit reports. Look for any mistakes that may be dragging your score down, and take note of any delinquent accounts. Make contact with any creditors who may be able to adjust payment plans, and come up with a debt strategy. You may also consider speaking with a credit counselor, who can help come up with a strategy based on your circumstances.

There are options for people with bad credit — but don’t wait by the phone

Government grant claims aren’t the only scams you may encounter as you try to get out of debt. In the end, the best bet is to take matters into your own hands and seek out legitimate debt solutions from reputable organizations. If you sit around waiting for someone to contact you about an offer, you’re likely to end up with something less than ideal, if not outright fraudulent.